El Paso Electric Earnings Preview

El Paso Electric (NYS: EE) beat estimates by $0.15 last quarter, and investors are hoping it can beat them again. The company will unveil its latest earnings on Wednesday. El Paso Electric is a public utility company, engaged in the generation, transmission, and distribution of electricity in West Texas and southern New Mexico.

What analysts say:

Buy, sell, or hold?: Analysts think investors should stand pat on El Paso Electric with three of five analysts rating it hold. Analysts like El Paso Electric better than competitor UniSource Energy overall. Zero out of two analysts rate UniSource Energy a buy compared to one of five for El Paso Electric. While analysts still rate the stock a Hold, they are a little more optimistic about it compared to three months ago.

Revenue forecasts: On average, analysts predict $285.6 million in revenue this quarter. That would represent a rise of 1.9% from the year-ago quarter.

Wall Street earnings expectations: The average analyst estimate is earnings of $1.37 per share. Estimates range from $1.29 to $1.42.

What our community says:CAPS All-Stars are solidly behind the stock with 95.8% assigning it an outperform rating. The community at large agrees with the All-Stars with 93.5% giving it a rating of "outperform." Fools are keen on El Paso Electric, though the message boards have been quiet lately with only 26 posts in the past 30 days. Despite the majority sentiment in favor of El Paso Electric, the stock has a middling CAPS rating of three out of five stars.

Management:El Paso Electric's profit has risen year over year by an average of 20.9% over the past five quarters. A year-over-year revenue increase last quarter snaps a streak of two consecutive quarters of revenue declines. Revenue rose 14.8% in the second quarter and fell 13.7% in the first quarter and 6% in the fourth quarter of the last fiscal year.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

37.5%

27.6%

26.5%

43.1%

Net Margin

13.6%

3.8%

4.1%

21.5%

One final thing: If you want to keep tabs on El Paso Electric movements, and for more analysis on the company, make sure you add it to your watchlist.